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Educational Returns, ability composition and cohort effects : theory and evidence for cohorts of early-career UK graduates

  • Ireland, Norman

    (Department of Economics, University of Warwick)

  • Naylor, Robin A.

    (Department of Economics, University of Warwick)

  • Smith, Jeremy

    (Department of Economics, University of Warwick)

  • Telhaj, Shqiponja

    (CEP, London School of Economics)

An increase over time in the proportion of young people obtaining a degree is likely to impact on the relative ability compositions (i) of graduates and non-graduates and (ii) across graduates with different classes of degree award. In a signalling framework, we examine the implications of this on biases across cohorts in estimates of educational returns. In an empirical analysis, we exploit administrative data on whole populations of UK university students for ten graduate cohorts to investigate the extent to which early labour market outcomes vary with class of degree awarded. Consistent with our theoretical model, we find that returns by degree class increased across cohorts during a period of substantial graduate expansion. We also corroborate the empirical findings with evidence from complementary data on graduate sample surveys.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2009/twerp_906.pdf
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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 906.

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Date of creation: 2009
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Handle: RePEc:wrk:warwec:906
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